Should you shell out for an extended warranty? We ask an expert

When you buy a new smartphone, TV, or laptop there’s a good chance that you’ll be offered an extended warranty. In-store sales staff often push extended warranties hard for consumer electronics. Is it because they fear you’ll damage your device and be left without coverage, or is it because extended warranties are hugely profitable for them? We decided to ask an expert.

“Our reader surveys have shown time and again that extended warranties are not a good deal for most consumers,” says Glenn Derene, electronics editor for Consumer Reports. “Many products are reliable and don’t break during the period covered, and the plans cost as much as you’d pay for a repair that might never be required.”

But there are instances when you might want one.

Some people feel more comfortable knowing they are covered. If you feel it’s likely you’ll need extra support or cover for accidental damage, then some extended warranties or coverage might be a good deal for you.

“It’s worth considering Apple’s extended warranty/service plan if you want phone or online support for more than the standard 90 days. Apple consistently stands out in our surveys for offering the best computer tech support in the business.” explained Derene. “Though we generally don’t recommend extended warranties, you might want one for a computer, especially if it covers accidental damage.”

What about smartphone insurance?

We’ve seen various studies over the years suggesting that anywhere from 30 to 50 percent of smartphones fall victim to some kind of accident, from a simple scratch on the screen or body to a dunking in the toilet or a cracked display after a fall.

“Surveys have shown time and again that extended warranties are not a good deal for most consumers.”

“When it comes to smartphones, extra-cost insurance or warranties may seem like sensible protection for the day your phone breaks or leaves you unexpectedly, but neither tends to pay off,” said Derene. “In Consumer Reports polling, only 15 percent of buyers had acquired a new phone because the old one broke. Monthly insurance premiums for smartphones are typically $10 or more, with deductibles well north of $100. Skip the extended warranties, as well. They have similarly high up-front costs and service deductibles.”

The high cost, and low likelihood of encountering a problem you can actually claim for, are not the only reasons to avoid phone insurance or extended warranties.

“If you do make a claim, don’t expect a new version of your old phone. Insurance plans might replace your phone with a refurbished, equivalent model,” Derene explained. “We say keep your old phone, that way you’ll have it to use as backup in case your newer phone breaks or is lost or stolen.”

How about PCs, TVs, and cameras?

The chances that you’ll actually require a repair are fairly low. According to Consumer Reports survey data, they break down like this:

PCs (laptops, desktops, notebooks) have a 24 percent repair rate

TVs have a 7 percent repair rate

Point-and-shoot cameras have a 5 percent repair rate

SLRs have an 8 percent repair rate

Another important issue to keep in mind is that, even with an extended warranty, you may not be covered for the issue you encounter, and the repairs people actually get often leave them feeling unsatisfied.

“Only 15 percent of products in our survey were covered by the manufacturer’s regular warranty when they broke, and about 10 percent were under a service contract or extended warranty,” says Derene. “People who had a service contract or an extended warranty weren’t any happier with their repairs. They actually were more likely to have had repairs done incorrectly the first time around and waited at least two weeks for the repair than people who didn’t have those contracts.”